Forex Technical and Fundamental Analysis for November 11,2011

EUR/USD Technical Analysis for November 11, 2011

EUR/USD rose during the session on Thursday as traders did some profit taking after a large move to the downside. The 1.36-1.34 area looks very supportive, and a bounce from here wasn’t too far out of the question. The bounce is still just a small fraction of the fall, so we are looking to sell on rallies. The breaking of the 1.34 level to the downside would have us pressing to find the 1.31 level. We aren’t ready to buy at this point as the EU has far too many problems. Selling rallies has been the way to go for some time, and it looks like that might continue.

EUR/USD Fundamental Analysis for November 11, 2011

The EUR/USD saw enjoyed some relief gains on Thursday with investors eyeing some political relief in debt-laden nations and steps taken to shelter the nations from falling deeper in the crisis, and especially Italy.

The losses endured on Wednesday eased after Germany denied reports saying it is considering a smaller euro area and allowing nations to drop out of the single currency. More support came from Italy which sold 12-month treasuries meeting the target despite the surging yield, as the auction was met with strong market demand.

Greece also helped ease the uncertainty and political strain announcing the new coalition crisis government led by Lucas Papandemos and the new government will be sworn in on Friday.

We can still say that the strain is evident and the problems have not ended, especially for the new Greek government that will still take the nation to its second bailout. In Italy the stepped up the efforts and brought forward the vote on the new measures to meet the EU required reforms which the markets will focus on in the coming days.

Friday the parliament in Italy will provide the vote on new measures from asset sales to raising the retirement age to speed the political process and meet the reform target, especially as Italy agreed to IMF and EU monitoring of its progress. The second vote from the House of Deputies is also expected on Saturday and a confidence motion on the measures will soon after see the resignation of Berlusconi as he promised.

Investors will continue to eye the developments in the euro area and especially Italy on Friday and the choppy end of the week trading will be evident, especially as we still do not have political clarity for the next government. Berlusconi’s party softened their insistence for an early election and Mario Monti a former European Commissioner is seemingly the favourite to run a new crisis government, yet still we heard opposition to that option as well.

The United States will start the session at 14:55 GMT with the University of Michigan confidence in a preliminary reading for November, with expectations that the confidence could have slightly improved to 61.0 from 60.9.

USD/JPY Technical Analysis for November 11, 2011

USD/JPY had a slightly down session on Thursday as traders continue to grind this pair lower. The post-intervention reaction is the standard one, as the market will try the patience of the Bank of Japan as they always do. The bank intervened on its own, so there is a real chance that we will revisit the low levels on this chart again. Because of this, we are sellers, but understand that the movement might be very, very slow.

USD/JPY Fundamental Analysis for November 11, 2011

The USD/JPY pair traded in a narrow range early Thursday despite the strong performance of the dollar against the euro and other major currencies. The Japanese yen also recorded gains against most of its major counterparts, due to risk aversion amid prevailing jitters over Europe and the global economic outlook.

The greenback soared against the European currencies after Italian yields rallied to records above 7%, which fuelled fears that Italy may follow Greece and Portugal and ask for help package.

The confidence evaporated from markets and risk aversion returned to drag higher-yielding currencies down, where investors shifted to safe haven currencies such as the dollar and the yen.

The US dollar still trying to find a weak point in the yen’s defence to earn some ground against it, but it seems like the only weakness in the Japanese currency was due to the BoJ’s intervention.

On Friday at 23:50 GMT (Thursday), Japan will release the Tertiary Industry Index for September, which had a previous reading of –0.2% and it’s expected to come at –0.6%.

At 14:55 GMT, the U.S. economy will issue the University of Michigan Confidence for November, where it’s expected to come at 61.0 from the previous 60.9.

GBP/USD rose during the session on Thursday as traders had a bit of a relief rally after a particularly bearish session on Wednesday. However, the gains were minimal compared to the losses, and the gains were even given up towards the end of the day to form shooting star at the bottom of the recent consolidation area. This is a sign that it couldn’t rally, and 1.60 seems to be giving the pair fits at this point. Because of this, our outlook on this pair is for weakness. The breaking below the Thursday lows would signal another round of selling in our opinion. We won’t buy at this point as there are far too many headline risks out there to buy a risk-correlated pair like cable at the moment.

GBP/USD Technical Analysis for November 11, 2011

GBP/USD rose during the session on Thursday as traders had a bit of a relief rally after a particularly bearish session on Wednesday. However, the gains were minimal compared to the losses, and the gains were even given up towards the end of the day to form shooting star at the bottom of the recent consolidation area. This is a sign that it couldn’t rally, and 1.60 seems to be giving the pair fits at this point. Because of this, our outlook on this pair is for weakness. The breaking below the Thursday lows would signal another round of selling in our opinion. We won’t buy at this point as there are far too many headline risks out there to buy a risk-correlated pair like cable at the moment.

GBP/USD Fundamental Analysis for November 11, 2011

The pair showed an incline on Thursday trading on hopes Greece and Italy are close to achieving political stability which spurred demand on the pound as a high-yield currency.

After Prime Minister Silvio Berlusconi offered to step down after the approval of the austerity measures needed to cut the euro area’s second-largest budget shortfall, Fabrizio Cicchitto, head of the parliamentary group of Berlusconi’s People of Freedom, said his party is discussing the formation of an interim government led by former European commissioner Mario Monti as well as early elections, providing hopes the debt-mired economy will find political stability soon.

In addition, Italy sold today 5 billion euros of one-year treasuries with yield of 6.087 per cent, the highest since 1997, where after the auction the yield on 10-year bond eased below 7%.

On the other hand, The Greek President’s office said on Thursday that Lucas Papandemos, a former ECB vice-president, will lead the new crisis coalition and they will be sworn in on Friday at 12:00 GMT.

Moreover, upbeat data from the U.S. added positivity to the sentiment as trade deficit narrowed to 43.1 billion pounds in Sep. from the revised 44.9 billion pounds in August, and initial jobless claims for the week ended Nov. 5 retreated to 390,000 from 400,000.

On the other hand, the BoE rate decision announcement did not have much impact on the pair as the decision which included holding both interest rate and APF steady in Nov. was expected.

On Friday, The week ends with the release of U.K. PPI for Oct. will be released at 09:30 GMT. While the U.S. will release University of Michigan confidence, at 14:55 GMT, which is estimated to slide to 60.0 in Nov. compared with the prior reading of 60.9.

The data is predicted to have an impact on the pair, yet the main focus will remain on the latest developments from the euro zone.

USD/CHF Technical Analysis for November 11, 2011

The USD/CHF pair fell on the Thursday session, but found support at the 0.9000 level. The pair continues to look healthy, and the 0.9000 level holding as support is a good sign for bulls in this marketplace. The pair is known to grind, so sudden moves aren’t necessarily expected, but we still like the move up as the world continues to buy Dollars, and the Swiss National Bank continues to fight Franc strength. We like buying dips at this point.

USD/CHF Fundamental Analysis for November 11, 2011

The pair showed a decline on Thursday trading as hopes Greece and Italy are close to achieving political stability damped haven demand on the dollar.

After Prime Minister Silvio Berlusconi offered to step down after the approval of the austerity measures needed to cut the euro area’s second-largest budget shortfall, Fabrizio Cicchitto, head of the parliamentary group of Berlusconi’s People of Freedom, said his party is discussing the formation of an interim government led by former European commissioner Mario Monti as well as early elections, providing hopes the debt-mired economy will find political stability soon. In addition, Italy sold today 5 billion euros of one-year treasuries with yield of 6.087 per cent, the highest since 1997, where after the auction the yield on 10-year bond eased below 7%.

On the other hand, The Greek President’s office said on Thursday that Lucas Papandemos, a former ECB vice-president, will lead the new crisis coalition and they will be sworn in on Friday at 12:00 GMT.

Furthermore, optimistic data from the U.S. added positivity to the sentiment as trade deficit narrowed to 43.1 billion pounds in Sep. from the revised 44.9 billion pounds in August, and initial jobless claims for the week ended Nov. 5 retreated to 390,000 from 400,000.

On the other hand, SNB Vice President Thomas Jordan said on Tuesday the franc remains overvalued and the bank is ready to intervene at any time if needed, yet the bank is still resisting calls from government ministers and labour unions to raise the franc cap against the euro. On

Friday, the week ends with the release of U.S. University of Michigan confidence, at 14:55 GMT, which is estimated to slide to 60.0 in Nov. compared with the prior reading of 60.9. The data may to have an impact on the pair, yet the main focus will remain on the latest developments from the euro zone.

EUR/CHF Technical Analysis for November 11, 2011

EUR/CHF rose, and then fell during the session on Thursday. The pair tried to rally with the little bit of relief that we had in the Euro in general, but failed. The Swiss are waiting to intervene below the 1.20 level, so this pair is hard to short. Knowing this, the fact that it still pulled back at the end of the session shows just how weak the Euro could be in general. We would like to buy this pair someday, but only after the situation in Europe is under control.

EUR/CHF Fundamental Analysis for November 11, 2011

The EUR/CHF fluctuated heavily on Thursday after the selloff on Wednesday that sent the euro strongly lower. The pair continues to trade with volatility with the focus on the euro area and the debt crisis yet some relief was felt on Thursday though not likely to last long with choppy trading seen ahead as eyes are still on Italy and a critical parliament voter.

The losses endured on Wednesday eased after Germany denied reports saying it is considering a smaller euro area and allowing nations to drop out of the single currency. More support came from Italy which sold 12-month treasuries meeting the target despite the surging yield, as the auction was met with strong market demand.

Greece also helped ease the uncertainty and political strain announcing the new coalition crisis government led by Lucas Papandemos and the new government will be sworn in on Friday at 12:00 GMT.

Friday the parliament in Italy will provide the vote on new measures from asset sales to raising the retirement age to speed the political process and meet the reform target, especially as Italy agreed to IMF and EU monitoring of its progress. The second vote from the House of Deputies is also expected on Saturday and a confidence motion on the measures will soon after see the resignation of Berlusconi as he promised.

Investors will continue to eye the developments in the euro area and especially Italy on Friday and the choppy end of the week trading will be evident, especially as we still do not have political clarity for the next government. Berlusconi’s party softened their insistence for an early election and Mario Monti a former European Commissioner is seemingly the favourite to run a new crisis government, yet still we heard opposition to that option as well.

AUD/USD Technical Analysis for November 11, 2011

The AUD/USD pair fell and rose during the session on Thursday as the headlines continue to push this pair around. The 1.01 to parity levels are one big support zone in our opinion, and we think they could possibly give the bears a hard time. The resulting candle was a doji, which is easy to understand. The breaking of the highs of the candle will be a bullish sign, and a breaking of the bottom would be bearish, although we would have to see a close below the parity level to seriously consider selling at this point.

AUD/USD Fundamental Analysis for November 11, 2011

The AUD/USD pair continued to move to the downside early Thursday after it dropped to its lowest level in four weeks, as the greenback soared against other major currencies after woes increased that the debt contagion threatens Italy.

On the other hand, the Australian economy was able to hire more people in October, as the unemployment rate was unchanged at 5.2%, while energy companies led the employment which came at 10.1 thousands, easing some of the pressure.

The cheerful employment data didn’t support the Aussie against the dollar much, where the pair still trading near its four weeks low, as the current market sentiment is focusing on lower-yielding currencies.

Also the Chinese trade surplus fell below expectations in October, which reduced demand on Aussie, where China is the biggest trade partner for Australia.

On Friday at 14:55 GMT, the U.S. economy will release the University of Michigan Confidence for November, where it’s expected to come at 61.0 from the previous 60.9.

USD/CAD Technical Analysis for November 11, 2011

USD/CAD fell on Thursday as the oil markets continue to rise in value. The CAD always gets a boosts in this types of situations, as the world continues to buy the biggest Canadian export. The demand for CAD should continue to rise as long as the oil markets do, but we also see parity as a massive supportive area. The market could drop as low as 0.99 and still be support, so we think that the near-term has us seeing consolidation in the 1.03 to 0.99 areas.

USD/CAD Fundamental Analysis for November 11, 2011

The USD/CAD pair rebounded to the downside on Thursday, amid rising risk targeting in markets, as Lucas Papademos was named to be interim prime minister of Greece, the U.S jobless claims fell to its lowest since April and U.S trade deficit narrowed in September.

Traders will continue to monitor the latest developments fromEurope, and if optimism continues to dominate markets, we should expect the USD/CAD pair to extend its losses on Friday. Nonetheless, if some progress is made inEurope, demand for higher yielding assets will improve and that will put the USD/CAD pair under pressure.

Friday November 11:

Canada will release the manufacturing sales index at 13:30 GMT, which is expected to have risen in September by 1.9% compared with 1.4% in August.

At 14:55 GMT the University of Michigan confidence for November is expected with a rise to 61.5 from 60.9.

NZD/USD Technical Analysis for November 11, 2011

The NZD/USD pair fell on Thursday as the headline risks in Europe still dominate the headlines around the world. The Kiwi had a very bearish day on Wednesday, and the slow move down on Thursday could be thought of as a “rest” for the market. However, there are simply far too many reasons for the risk trade to fall apart currently. Knowing this, it is perfectly understandable how this pair failed to rally, and even broke through the 0.78 support area on the session. We like selling rallies at this point in time, as long as we continue to hang around under the 0.8000 level.

NZD/USD Fundamental Analysis for November 11, 2011

The NZD/USD pair fell to its lowest level in four weeks after the greenback recorded gains against other majors. The current market sentiment is still pessimistic and demand is focused on lower-yielding currencies and safe havens.

The New Zealand dollar dropped for the third day against the yen with the selloff in Asian stock markets, where the Kiwi lost momentum due to the uncertainty regarding the global economy outlook and deepening debt crisis in Europe.

Also the Chinese trade surplus fell below expectations in October, which reduced demand on the Kiwi, where China is the biggest trade partner for New Zealand.

On Friday at 14:55 GMT, the U.S. economy will issue the University of Michigan Confidence for November, where it’s expected to come at 61.0 from the previous 60.9.

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